High Court Of Madras
CIT vs. Sivananda Steels Ltd.
Section 271(1)(c)
Asst. Year 1981-82
R. Jayasimha Babu & A.K. Rajan, JJ.
T.C. No. 195 of 1996
1st November, 2001
Counsel Appeared
Mrs. Chitra Venkataraman, for the Applicant : P.P.S. Janardhanaraja, for the Respondent
JUDGMENT
R. JAYASIMHA BABU, J. :
The Tribunal has held that the claim that has been made by the assessee for depreciation and investment allowance on newly installed machinery was made bona fide by placing reliance on the decision in the case of V. Ramakrishna & Sons vs. CIT (1984) 149 ITR 554 (Mad) : TC 28R.361, wherein it has been held that the user of the machinery in test production or experimental manufacture was still user for the purpose of the assessee’s business. The assessee had purchased a centrifugal casting machine at the cost of Rs. 16,38,623 which was installed on 4th March 1981. The machine was tested with aid of temporary electric connection. However, the actual production with the use of the machinery commenced only in November, 1982. The assessee had claimed depreciation for the asst. yr. 1981-82, but subsequently withdrew the claim. The AO initiated proceedings against the assessee for having submitted inaccurate particulars in the original returns and levied penalty which was confirmed by the CIT(A). The Tribunal having set aside the same, this reference is before us at the instance of the Revenue.
The finding of the Tribunal is that the claim was bona fide and was based on a decision of the Court. The fact that the assessee subsequently withdrew the claim did not show that there had been deliberate furnishing of inaccurate particulars by the assessee when it filed the original returns. The fact that it had subsequently withdrawn the claim, also on that account alone did not establish that there was a deliberate attempt on the assessee’s part to claim benefit to which it was not entitled. On the other hand, the decision of this Court on which it had relied did indicate that the question was one on which two opinions could exist. It is also the further finding of the Tribunal that the particulars given by the assessee were accurate. The difference of opinion between the AO and the assessee as to whether the experimental running of the machine was sufficient to regard it as use in the business of the assessee entitling the assessee to claim depreciation for the year, therefore, cannot be regarded as sufficient to subject the assessee to penalty on the ground that the particular given by assessee were incorrect. The Tribunal was, in the circumstances, right in holding that the penalty was not leviable and setting aside the penalty that had been levied.
5. We, therefore, answer the questions referred to us, viz., Whether on the facts and in the circumstances of the case, the Tribunal is right and had valid materials in cancelling the penalty imposed under s. 271(1)(c) for the asst. yr. 1981-82 ? Whether the Tribunal’s view that the facts of the case do not establish that there was any furnishing of inaccurate particulars by the assessee so as to justify the imposition of penalty under s. 271(1)(c) is reasonable, supported by valid materials and sustainable in law ? in favour of the assessee and against the Revenue.
[Citation : 256 ITR 683]
